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EX101: What is the Value of Employee Experience?

July 24, 2018

 

In our last EX101 post, we defined employee experience (EX) as the comprehensive set of interactions and observations an employee has within an organization. More specifically, over the total timeline of their employment and across all types of experiences. This definition is helpful in forming leaders' understanding of EX - but doesn't shed light on why EX is important to their organization. In this EX101 post, we dive into the value of EX, exploring the way that EX impacts an organization and both the positive and negative effects that EX has on organizational performance.

 

The Causal Nature of EX

Why do the interactions and observations that make up EX matter? They matter because they ultimately determine how engaged employees are within their organization. To fully understand the impact of EX, there are three main concepts which need to be defined and understood:

  • Employee Experience (EX): The interactions and observations an employee has within their organization

  • Employee Perceptions (EP): An employee’s feelings and beliefs about their organization

  • Employee Engagement (EE): An employee’s willingness to act on behalf of their organization

An employee gains thoughts or feelings about their organization when they have experiences within their organization. Those thoughts and feelings determine how an employee perceives their organization, and those perceptions determine how engaged that employee is. The real value of EX lies in its ability to impact employee perceptions, and ultimately, employee engagement.

Employee experience determines employee perceptions, and employee perceptions determine employee engagement.

 

The Impact of EX

Employee experience can be perceived to be positive, negative, or neutral, and has a direct impact on employee engagement. The cause and effect relationship between EX and employee engagement is what makes EX such a vital part of an organization's success:

  • Positive EX: Causes employees to have positive feelings and beliefs about their organization

  • Neutral EX: Causes employees to feel indifferently about their organization

  • Negative EX: Causes employees to have negative feelings and beliefs about their organization

The resulting levels of employee engagement are directly determined by the quality of EX: 

  • Engaged (~33% of Employees): Engaged employees have positive perceptions and act on behalf of their organization. They are highly involved and are enthusiastic about their work and organization. They are psychological “owners" of their work, drive performance and innovation, and move the organization forward.

  • Not Engaged (~51% of Employees): Employees who are not engaged have a neutral perception and act on behalf of themselves. They are psychologically unattached to their work and organization. They’re putting time - but not energy or passion - into their work and are unconcerned about the organization moving forward.

  • Actively Disengaged (~16% of Employees): Employees who are actively disengaged have a negative perception and act to undermine their organization. They aren’t just unhappy at work - they are resentful that their experiences are so poor, and act out of their unhappiness. Every day, these employees attempt to sabotage what their engaged coworkers accomplish.

 

The Value of EX

EX directly impacts engagement levels, which have a tremendous impact on organizational performance. Engaged employees are proven to make a positive impact on organizational performance when compared to those who are not engaged or are actively disengaged. In fact, when compared to organizations with low employee engagement, those with high employee engagement boast:

  • 21% Higher Profitability: Engaged employees are more present and productive; they are more attuned to customer needs; and they are more observant of processes, standards, and systems.

  • 20% Higher Sales: Employees who are engaged have a greater commitment to creating organic growth.

  • 17% Higher Productivity: Engaged employees make it a point to not only show up to work, but to do more work.

  • 10% Higher Customer Metrics: Employees who are engaged are committed to improving customer relationships and outcomes.

  • 59% Lower Turnover: Engaged workers are more likely to stay with their employers and are less likely to be actively searching for new opportunities.

  • 41% Lower Absenteeism: Engaged workers make it a point to show up to work on a regular basis.

 

Organizations with neutral or negative employee experiences will be beat every time by their more engaged counterparts, due to their significant competitive advantage in key areas like profitability, sales, and productivity. Not only do they miss out on financial gains due to an increase in engagement, they suffer much higher costs due to higher metrics in areas like turnover and absenteeism. 

 

Summary

Employee experience can be either an extremely valuable or potentially damaging asset to organizations. Leaders who prioritize improving employee experience will ensure their employees have positive feelings and beliefs about their organization, and therefore, will realize higher levels of employee engagement. Accomplishing this will create a significant competitive advantage over less engaged counterparts, leading to increased profitability, sales, productivity, and customer metrics, while reducing turnover and absenteeism. This opportunity for competitive advantage is even greater for small to midsize organizations, as their size enables them to implement EX improvements much more quickly than their larger, more cumbersome counterparts.

 

The next step in impacting EX is to understand how to improve it. In our next EX101 post, we'll outline how to approach improving EX within your organization. In the meantime, subscribe to our blog to receive notifications about our EX101 series, and reach out to discuss this post or any other topics associated with EX. 

About Holistic

The Holistic Employee Experience Platform is designed to make work meaningful within organizations. Holistic connects and improves employee experience by focusing on four areas proven to drive an increase in employee engagement and organizational performance. To learn more about the Holistic Employee Experience Platform, visit our website, or reach out for a demo.

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